Macquarie Ups BlackBerry To Hold, Expect A Deal Soon

By Teresa Rivas

Shares of BlackBerry (BBRY) were up 4.4% at recent check, helped in part by an upgrade from Macquarie.

Analysts Kevin Smithen and Zach Horat upped their rating on the company to Neutral, maintaining their $7 price target. They write that the move comes after reports this weekend that companies including Google (GOOG), Cisco (CSCO), SAP (SAP) and SamsungElectronics (005930KS)have been doing due diligence on the company.

We admit we have no visibility into what the deal price will ultimately be, but we don’t see downside below $6 as we expect the Canadian and possibly the US government(s) will broker a quick sale in order to preserve service quality.

While BBRY’s consumer business is likely to be considered a net liability given what could be $1bln or so in cash exit costs, its enterprise IP, NOC and remaining services contracts could prove valuable to the Android camp or enterprise software companies that have, to this point, struggled to break into enterprise mobility.

Although there aren’t many near-term catalysts for the stock beyond further takeover news, Smithen and Horat write that at this point, the risk/reward profile has become more balanced, and they suggest holding onto the stock until any deal is reached—a development they see happening sooner rather than later, in the $6 to $9 price range, perhaps with a consortium of buyers.

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There are 5 comments

OCTOBER 7, 2013 2:38 P.M.

jay wrote:

this week's buyout rumor so the day traders can flip it (again) - so predictable.

OCTOBER 7, 2013 3:00 P.M.

Anonymous wrote:

blatant "lets protect our position" commentary from Macquarie. all based on rumors from Reuters???? government "broker a quick sale"??? what a crock of s___

OCTOBER 7, 2013 3:02 P.M.

Anonymous wrote:

and its not "reports" this weekend. It was ONE report - Reuters.

OCTOBER 7, 2013 5:47 P.M.

2 wrote:

"quick sale" yeah that's the strategic lingo cuz the thought of something dragged out like buying a Canadian company would turn everyone off. And the longer a sale takes the more remote it is that anything BB remains profitable or turnaroundable.

Blackberry will have to continue retreating financially but they are also obligated to continue servicing their biggest enterprise clients. If not. Big trouble. Big.

So even with shrinkage. Something's have to be kept up and going. 1. Obligations. 2. Money makers. The rest is problematic with an interesting shelf life that effects the pps.

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Tech Trader Daily is a blog on technology investing written by Barron’s veteran Tiernan Ray. The blog provides news, analysis and original reporting on events important to investors in software, hardware, the Internet, telecommunications and related fields. Comments and tips can be sent to: techtraderdaily@barrons.com.